Pakistan is now a target of the ‘predatory global capital’. This global capital has for years seen the Pakistan economy as increasingly dependent on foreign largesse and the State as weak and tottering, run by a self-serving civilian and military elite. In corporate terminology, it is considered a soft target for a hostile takeover, with little possibility of resistance and willing acquiescence from elements within the State apparatus. Collaboration in this regard has been forthcoming for over two decades from a stream of foreign and locally based Pakistani technocrats in the employ of global capital and willing and unwitting Establishment big-wigs and darbari economists and professionals – turncoats a la Mir Jaffars who have no qualms about selling a piece of their country.
Evidence of creeping control of the Pakistan economy emerges from the stream of imported ‘contract technocrats’ – all Pakistanis – brought in to ‘manage’ the economy. The first overt measure in this respect was when Moin Qureshi, ex-World Bank, was flown in to take over as interim Prime Minister for three months in 1993. Muhammed Yaqub, ex-IMF, was appointed Governor of the State Bank and served till 1999. He was followed by Shahid Javed Burki, who flew in to take over as interim Advisor for Finance for three months in 1996-97. These were one-off forays.
The politics contextualizing the more recent turn of events is ominous. During the 1990s, the international financial community’s motivation in imposing their ‘contractors’ for managing the country’s economy appears to be largely financial – to protect the interests of creditor organizations and countries and expand profitable avenues for global capital. The ‘financial managers’ were mandated to force-introduce measures that would stabilize the economy, whatever the costs in terms of income and employment growth.
The 1998 nuclear test was a watershed event that changed the context altogether. The international community viewed Pakistan as too fragile a State and too irresponsible a governance structure to be trusted with nuclear weapons and needed to be ‘defanged’. A new security interest emerged and the post-1993 financial control model appears to have been found to be a useful vehicle to achieve twin aims: neutralizing Pakistan’s nuclear capability via windfall profits for global capital.
The military coup, one year after the nuclear test, triggered an invasion of ‘contract technocrats’ who represented global capital and were placed in charge of the economy. Shaukat Aziz, ex-Citi Bank, flew in to take over as General Musharraf’s Finance Minister in 1999 and was later elevated to the position of Prime Minister. His reign lasted seven years. Three among other ‘contract technocrats’ who were flown in during this period were Hafiz Shaikh, Ishrat Husain and Shamshad Akhter. The former served as Minister for Privatization and the latter two as State Bank Governors. Shamshad Akhter was also appointed caretaker Finance Minister in 2018. Hafiz Shaikh and Ishrat Husain are ex-World Bank and Shamshad Akhter is ex-Asian Development Bank. Hafiz Shaikh was again flown in and appointed Finance Minister in the PPP government. Nadeem-ul-Haque, ex-IMF, was appointed Deputy Chairman of the Planning Commission. Interestingly, the governorship of the State Bank was under the uninterrupted control of former IMF-World Bank-ADB appointees for 16 years from 1993 to 2009.
The post-1999 regimes, packed with ‘contract technocrats’ and supported by local collaborators, oversaw the wholesale transfer of several leading sectors of the economy to foreign interests. The unprecedented scale and speed of privatization of large and lucrative public enterprises in banking, energy, telecommunications, etc., sectors was overseen by Hafiz Shaikh. Global capital made record gains, with an invasion of foreign banks into the country, and the finance sector value addition recording historically high annual growth in excess of 30 percent. It, led by the World Bank, went in to overdrive to support the client military regime, whose economic team resorted to extensive fudging of data to support the mirage of “stellar growth” that was being painted.
Global capital – international lending institutions and rating agencies – continued to paint the ‘rosy’ account of the prospects of the Pakistan economy even during the PML-N’s 2013-2018 era, when all economic indicators were screaming danger. Based on these projections and waivers after waivers granted by the IMF, foreign lending accelerated; saddling the country with a historically high foreign debt burden. Clearly, Pakistan was being given a long rope to hang itself.
Now Hafiz Shaikh has once again been flown in to take over as Finance Minister. State Bank Governor Tariq Bajwa has been forced to resign and Raza Baqir, a serving IMF employee, flown in to take charge of the State Bank. Clearly, global capital has taken direct control of the economy and is not averse to using strong arm tactics to push through its predatory programme. It now appears to have one agenda: to treat Pakistan as the case of a company that has gone bankrupt and been taken over by a court-appointed ‘receiver’, with a singular mandate to liquidate the country’s prime assets at bargain prices. That it is now the turn of natural resources to be sold off is indicated by the fact that Mari Petroleum Company, holding the largest gas field in the country, is on the altar of privatization.
Hafiz Shaikh, veteran auctioneer, and Raza Baqir are global capital’s first line of generals leading the charge and more are certainly likely to follow. History is about to repeat itself. Warren Hastings became the first British governor of the Presidency of the East India Company in 1773, entrenched in Fort William in Calcutta, till the formal British takeover in 1858 and appointment of Lord Canning as Viceroy. There is one difference though. The actors in the 18th-19th century were British, acting on behalf of British interests. The actors today are Pakistanis, acting on behalf of global capital interests. As was the case with the tottering Mughal empire, the elected, democratic PTI government has been reduced to whimpering irrelevance.
The ongoing forced rise in energy and gasoline prices will accelerate inflation, which will then be made the basis of further interest rate rises. The crushing, lacerating impact on the middle class and the poor and on domestic investment, and consequently employment, is being dismissed with an insensitivity that is shocking. These are, in any case, not the concerns of global capital, which actually relishes feeding off the carcasses of the poor.
The impending distress sale of public assets to foreign firms will not just accrue windfall profits for global capital. It will also accelerate the outflow of profits – in dollars – and further aggravate Pakistan’s balance of payments quagmire. Pakistan will be forced to bow and beg for more and more assistance from international lending agencies and private banks, compounding the country’s insolvency. Much is being made of a potential threat of a Chinese ‘East India Company’ emerging out of CPEC. Completely overlooked is the already existing ‘East India Company’ with its Fort William-like presence on Shahrah-e-Jamhooriat in Islamabad.
Parallel to the above stated moves is the role of the Financial Action Task Force (FATF), which continues to dangle the sword of Damocles over Pakistan’s head by keeping it in the so-called Grey List. Pakistan is increasingly without friends, with enemies nibbling at the border. China has withdrawn its protective hand in the case of Masood Azhar and will not be able to stand by Pakistan for long with respect to FATF. India also has a vote in FATF and exercises a degree of hold over Pakistan. The possibility of India playing a part in influencing the future trajectory of Pakistan’s fortunes cannot be ruled out. Clearly, the objective appears to be to bring Pakistan to the point of bankruptcy where Greece was brought to in 2007-08. The difference being that in Pakistan’s case, the ultimate price is likely to be forced de-nuclearization, with the concomitant foreign domination and control of the national economy and the death of Pakistan’s economic sovereignty.